SJP profits fall as FSCS levy costs hit £20m

St James’s Place has seen a fall in profits for full year 2015, despite seeing record gross inflows for the year.

Profit before tax for the year ended 31 December 2015 hit £151.3m, down from the previous year’s £182.9m, which the firms says was “impacted by the negative £21.7m change in the movement of certain accounting intangible assets and liabilities”.

The company saw record gross inflows of £9.24bn, up on £7.88bn last year. However, the firm saw sizeable outflows bringing net inflows to £5.78bn, up on last year’s £5.09bn.

Total funds under management at the group are now £58.6bn, up on £52bn last year.

Another cost to hit the firm was a £14.2m increase in the FSCS levy, taking the fee for this year to £20.1m.

The firm also saw higher regulatory costs of £7.5m this year compared to £6.1m last year. It is forecasting another hike in 2016 to £8.5m.

Another cost to hit the firm was implementing a new back-office system, with the firm spending £18.1m on infrastructure costs last year. SJP launched a new software platform called Bluedoor last year, and says the move of the Isa and unit trust business to the new system was “successfully completed” in October.

However, Money Marketing sister title Fund Strategy recently revealed a number of clients have complained a system outage means they have not been able to access written information on their holdings.

SJP plans to roll out this new system to its pensions business this year, launching a new retirement account on the platform this summer.

The firm is eyeing expansion in London, following its acquisition of Rowan Dartington last year, and plans to establish an office in Canary Wharf in May this year.

Looking to fund flows, SJP’s equities business grew the most, with assets in its North American equities business rising from £104bn to £13.1bn in the year. The UK equities business also increased from £14.9bn to £15.6bn.

Fixed income assets grew £1.7bn to £8.8bn in the year, while property assets also rose from £1.5bn to £2.2bn.

SJP launched two new bond funds in November last year, the Strategic Income and Diversified Bond funds, while it says the Rowan Dartington acquisition also adds to its investment offerings.

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Comments

Quite outrageous, don’t get me wrong, whether you like SJP or not its just, outrageous !!
I read a report / article the other week that suggests the FSCS levies has cost £45,000 per adviser over the past 5 years ( i did have a look back, and mine although not that much, it wasn’t far off)

It is simple really, if a company should have shown a profit, but now has a loss mainly due to increased levies, its little wonder the cost to the end user (the clients) will increase dramatically,

My question to the regulator and FSCS, how is this right or just, that good people (clients) pay for the bad ?

Had this money been declared as profit rather than paid out in compensation it would have netted the Treasury £4m in Corporation Tax. For how long is the Government going to tolerate the £0.5bn costly failure that is the FCA?

For all of the criticism of the SJP business model, they are big, profitable, solvent and unlikely to be going anywhere soon. So their “success” and the subsequently high FSCS bill has thankfully significantly subsidised the smaller IFA practice when it comes to FSCS funding.